I am trying to find ways to legally reduce MAGI below the threshold of ACA subsidy for a family of 4. Apart from the usual list of things such as company contributions to solo 401k and deducting legitimate business expenses etc., is there anything else with a s-corp that I am missing ?

Is your spouse an employee of the S-Corp? If spouse does some work for the S-Corp, consider adding spouse to payroll which opens up Solo 401k for another person. If spouse does not currently work or has a job with no employer sponsored retirement plan, this could allow a big Solo 401k contribution even on modest income. For example, 25K salary for spouse could allow 18.5K solo 401k employee salary deferral and 6.25K employer profit share for a total of 24.75K. This assumes you're also contributing 25% employer profit share for yourself. This 25K of extra salary, 6.25K of employer profit share as well as employer social security/medicare reduces your S-Corp's net income (flows via K1 to your personal return) but the spousal W-2 income is shown in line 7 of 1040. Out of 25K W-2 for spouse, you should see 18.5K reduction if employee Solo 401k are Traditional.

Traditional IRA contributions may be deductible for both of you if your MAGI for Traditional IRA purposes is under 101K. This assumes both of you are covered by employer plan. If spouse is not covered by employer plan, the non-covered spouse has a higher limit of 189K to take the TIRA deduction. The TIRA deduction would help reduce MAGI for ACA purposes.

Last edited by DSInvestor on Tue Jun 12, 2018 3:22 pm, edited 1 time in total.

Lower your Capital Gains, Dividends, Interest, & Inherited IRA RMDs (if any) - (don't forget kids that are getting more than a certain amount in their UTMA interest/Cap Gains as it could go under parents)

Your HSA, selfemployment tax (i use 7.1 * net after expenses), and I think there is still a college deduction $4000 (for kids that are going) are taken out before MAGI.

Note on HSA - if you qualify for the extra $1000 in catch up because of your age(s). If both parents are catching up the spare spouse' extra 1000 has to go into their very own account.

We are using a SEP IRA instead of the solo 401k but I think you can take more than us. The SEP allows contributions for the prior year up to tax time so I can adjust, don't know if it's the same with the solo. Check and see if you can still do regular IRAs while doing the solo. We can with the SEP so both will be maxing traditional IRA.

I track in my spreadsheet monthly and make estimates for CapGains etc.

Of course the fall back is - make less money & adjust your invoice timing, have more kids

>> Of course the fall back is - make less money & adjust your invoice timing, have more kids

Having more kids doesn't help the MAGI itself, but will help with expanding your baseline cushion by increasing the number of people in the household. The deductions/exemptions are/were taken after MAGI calculations. From 2018 on, it doesn't even matter.

1 Make less money
2 Contribute moocho max to 401K & deductible IRA
3 Contribute moocho max to HSA
4 Keep most of your money in tax-deferred accounts.
5 Keep all your taxable investments in ETF's or Individual stocks so that you don't receive any cap-gains distributions. Mutual funds generate plenty because they trade in and out. With just ETF and stocks you can predict your dividend income very accurately.
6 Be on the look out for sharp down-turns when some of your after-tax investments have a paper-loss. Sell and buy equivalent investments to lock in the loss. Make sure you don't buy substantially identical investments or you will run afoul of wash rules. It is okay to sell S&P 500 index fund and buy VTI for example.
7 if you have a business/rental property etc. time your expenses when you need to bring down your MAGI to stay below the threshold.